The U.S. Dollar is currently losing ground across the board, especially against the Euro and Japanese Yen as markets are reacting positively to increased implementation of spending measures
Overview
We are monitoring statements from the European Central Bank’s press conference and gauge reaction to a plan for Germany to expand fiscally in a big way. Consequently, German treasury Bunds had their worst session since 1990 as the country opens its coffers and leaves deficit controls behind. In Japan, good economic momentum has renewed faith in the world’s second largest reserve currency as outlooks also get tougher for other regions based on “trade wars” concerns.
Chinese technology continues to surprise with Alibaba introducing another artificial intelligence platform, Qwen, promising to be more competitive and affordable than others out there. This adds to jitters across markets since plenty of the gains in equities have been driven by hopes of even more prosperity from A.I. dominance by American firms and puts doubt over their future earnings.
We will see if anything gets resolved over tariffs as Canada and Mexico were reported to be working on taking away levies while the U.S. said the automotive industry would be given a one-month exemption from the 25.0% tax on all goods. The Buck is now trading at its weakest point since November 8th. Data-wise, we have Non-Farm Payrolls and Employment Situation tomorrow first thing.
What to Watch This Week…
- US Nonfarm Payrolls, Friday 8:30AM
- Monex USA Online is always open
Complete Economic Calendar can be found here.
EUR ⇑
The Euro has climbed to its strongest point over the dollar since early November as traders and investors continue to reward the shared currency based on German fiscal expansion. As the EU’s largest economy gets ready to spend more to upgrade its infrastructure and defense capabilities, the mood has changed dramatically over the common currency’s prospects for growth.
At the time of writing this report, the European Central Bank announced its decision to cut interest rates by 25 basis points. The stimulus-driven approach, that comes at a time when the Euro-zone avoided contraction and inflation seems tamed, is a greater situation for Europe than most banks foresaw. ECB President Lagarde is expected to maintain her statements “hawkish,” which could add to Euro fortunes.
MXN ⇑
The Mexican Peso is surviving the negativity over imposed tariffs, especially after the U.S. made it possible for the auto industry to be exempt. Protectionism is not good for a country that depends heavily on the USMCA agreement, so markets are eager to hear a resolution. Tomorrow, we will see if inflation is also something else to worry about as February Consumer Price Index is out for Mexico.
